Bellway, one of the UK’s biggest housebuilders, warned this morning that its margins could fall by more than half this year.
In a trading statement this morning, Bellway said that its margins remained under ‘extreme pressure’ and could fall by more than 50% compared to the 18.1% posted in the six months ending 31 January 2008.
Its sales dropped 38% last year from 3,252 in the previous year to 2,014.
It has also suffered a 49% fall in its order book which has dropped off from £580m to £296m, equating to 89% of the target orders for July.
The average sale price of its homes also fell from £174,800 last year to £160,000, which it attributed to increased discounting and a 20% increase in social housing completions.
It warned that cash discounting, part exchange and shared equity ‘have been used in virtually every private sale to maintain a sales rate which has been in line with our expectations.’
The housebuilder said that its main focus was reducing its £402m debt by between £100m and £120m by 31 July which could include selling off land.
It said: ‘Cost pressures have been eased in recent months but the level of new development has slowed considerably, consequentially, these full benefits are not yet being realised. A further review of the holding cost of land may have to be undertaken to reflect conditions prevailing at the time of the group’s announcement of its interim results on 31 March.’